A reluctant blogger is back from a job-imposed hiatus.
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by Philipina A. Marcelo
More than two months??? Has it been that long since I last visited my own blog? Wow! Busy, busy me! But this doesn't mean that I stopped reading the New York Times, Economist and, uh, TMS Comicspage… nor did I stop watching Jon Stewart (who has been reaching a new height of awesomeness these days) and Stephen Colbert, or Stephen Sackur, ‘cause I’ve not! I was just too preoccupied with a number of urgent things. Besides, I crashed my laptop… uh, again – my second within 15 months, and my third within 24 months! If the rate of computer crash is indicative of a person's stress level, then mine must be in the MPa range!
Yes, I was one of those stress-ravaged teachers struggling to reach the Academic Year's finish line, it was even impossible to squeeze out 30 minutes from my sked to visit the salon for a manicure/pedicure for more than a month! But now that we have just sent off 52 new chemical engineers to the real world, and helped more than a hundred more aspirants move one step closer to getting sent off soon, I say, I’m “mission accomplished” this Academic Year! Now, I deserve some blogging time before planning a “real vacation”… which, hopefully, would take me to the Great Wall of China, or the ruins of Greece, or the Pyramids of Egypt… and, uh, good old Disneyland (haha…)? Yah!
Speaking of China, on my first day of freedom from the bondage of grading test papers, I found this article on the Economist.com:
http://www.economist.com/daily/news/displaystory.cfm?story_id=13382566&fsrc=nwl
Oh, boy, here we go again... Tim Geithner better have a compelling argument against this one! No more sleeping at the switch for you now, pretty boy! And no more strutting at the ball court for you, too, Mr. President (Obama, that is)! In case you haven’t noticed, sir, uh, the presidential campaign period is already over. Majority of us in the free world have already decided that you’re cute enough for an un-photoshopped photograph… and that yeah, you could make a great leader, too... well, a great leader, first and foremost, actually. Now, maybe it’s time to actually lead? Well, OK… let me be fair and say, great job on the Gitmo plan, American troops withdrawal from Iraq plan and the handling of the Afghanistan/Pakistan issue so far. But, I digress….
Back to the Economist article… just when the Obama economic team is finally seeing a flicker of light at the end of the tunnel, after that two-week of numbers in green and upward arrows in the stock market, China issued a challenge with arguments that make sense, especially for them – right now. And, like a flash of lightning, the red numbers are back!
As per the Economist article, the governor of the People’s Bank of China, Mr. Zhou Xiaochuan, suggested that rather than continuing to use the US dollar as the foreign reserve currency, perhaps, it would be more beneficial for the financial systems around the world if governments used a synthetic currency, such as that of the IMF's special drawing rights (SDR), which is based on the weighted average of the dollar, euro, yen and pound. To my mind, a plan like this would help shield other countries from Wall Street risky financial somersaults in the future (not that the Knights of Greed would still dare when the dollar power diminishes more than it already has), and to recover from today’s financial crisis in a way that would be somewhat independent from the US’ own recovery strategy. It might just be a good idea, especially for China... or, mostly for China? (dammit, this is one of those days when I wish I minored in Economics!).
But what would such scenario do to market globalization? Wouldn’t this lessen the motivation among countries to sustain activities in the global market and focus instead on local market? For instance, isn’t it that the reason why China’s economy reached its present status – big enough to challenge and influence the Washington D.C. financial architects’ thinking – is because of the US opening up of its market to Chinese manufactured goods over the past two decades, which strengthened China’s manufacturing industry, even when local consumption is low? In the process, the US was also able to penetrate the Chinese soil to take advantage of cheap labor through partnerships with state-owned businesses? Back in those days, the dollar being the dominant currency as well as the reserve currency was beneficial to both countries – it brought stability to China’s economy and boosted that of the US. Although Washington D.C. could not claim a direct influence on Chinese political landscape (but hey, is there any government that can?), which remains to be an enigma to the whole world until now, it did enjoy considerable regard on financial-driven decisions in Beijing over the past two decades because of such bilateral business arrangements that contributed to an active global market. Many political analysts viewed this as maybe the “softening” of Beijing on an American handshake. Now, I wonder what those political analysts are thinking now! Are we seeing a shift of tide here? Is that good or bad? (No, I’m not asking for a Wall Street opinion here, thank you very much!!!) And just how does the Chinese’ “sovereign fund”, which I presume is in dollars, figure in all this? Just how large is it really that Beijing feels compelled to push for the end of dollar dominance in response to the US’ financial recovery strategy of “printing loads of money” that might hurt the dollar’s value? Just what, or how much, is at stake for China here? Sorry for asking, I’m just being my curious, academic self, that’s all.
So, are we really seeing the last days of dollar dominance? Just imagine how those Sarah Palinish Americans who still think that Asians lived on treetops would react to this! Haha… OK, I’m being silly, sorry. Going back… although Mr. Zhou Xiaochuan raised valid points (in favor of China, of course), to me, the more compelling argument is still this: “Mr. Zhou’s plan could win support from other emerging economies with large reserves. However, it is unlikely to get off the ground in the near future. It would take years for the SDR to be widely accepted as a means of exchange and a store of value. The total amount of SDRs outstanding is equivalent to only $32 billion, or less than 2% of China’s foreign-exchange reserves, compared with $11 trillion of American Treasury bonds.” On second thought… we mustn’t forget, we’re talking about an enigma here.
Wait, did I forget to include Taj Mahal in my must-see list this summer? Whatever, I’ll go to Palawan! Yah!
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